Export Development Canada to pay $969M dividend to federal government

Export Development Canada is paying a $969-million dividend to the federal government this year.

The payment compares with a dividend of $786 million the agency paid last year and $500 million paid in 2016.

EDC generates revenue primarily from interest on loans, fees on its guarantee products, and premiums on its insurance products.

The crown corporation says it finished 2017 with $60 billion in assets and earned $1 billion for the year.

EDC’s full annual report will be released in the second quarter.

Insurance industry welcomes news of implementation date for FSRA

Insurance Bureau of Canada (IBC) welcomes the announcement in March 28, 2018’s  Budget that the Ontario government has confirmed that the Financial Services Regulatory Authority (FSRA) will be operational by April 2019.  The new regulator will bring more effective and coordinated regulation services to Ontario.

“We see FSRA as a proactive, innovative regulator that will lead to sustainable improvement in rates for Ontario’s almost 10 million drivers,” said Kim Donaldson, Vice-President, Ontario, IBC. “Ontario’s insurers support this new regulator and we look forward to working with FSRA.”

Additional proposed legislative changes will allow FSRA to make rules requiring insurers to provide claims and vehicle repair history information to persons to be prescribed in regulation, most likely used car dealers. IBC has long been advocating for a data access solution.

As part of the budget, the government also announced changes to the Insurance Act to give FSRA prudential oversight of certain insurance companies incorporated in Ontario.

Other key points in the budget include the following:

Ontario Fair Auto Insurance Plan

The government reaffirmed its commitment to transforming the auto insurance system. It also reiterated the measures contained in the Fair Auto Insurance Plan to bring rates down in a sustained way, ensure people who are injured in collisions receive the care they need, and reduce fraud and disputes.

Of note, the government has adopted the recommendation made by the industry on how to best manage the care of those who have suffered a catastrophic impairment as the result of a collision. Instead of making this the responsibility of the Ministry of Health as recommended in David Marshall’s report Fair Benefits Fairly Delivered, there will be funding through the Ontario Neurotrauma Foundation to develop evidence-based programs of care for the most seriously injured.

Cannabis

Another key item in today’s budget is contained within Ontario’s framework covering the sale, distribution, purchase, possession and consumption of cannabis. The government is creating a dedicated team of nine Crown counsels and three administrative staff to support drug-impaired driving prosecutions and the new tools for field sobriety testing.

5 things to know about cannabis from Ontario’s latest provincial budget

As the federal government moves to legalize marijuana for recreational users later this year, Ontario’s latest budget sheds light on the province’s approach to sales, distribution, enforcement and revenue expectations.

– The Ontario Cannabis Retail Corporation, an LCBO subsidiary created to manage sales and distribution of recreational pot in the province, is not expecting to generate profits immediately after legalization. It is expecting an $8-million loss in 2017-2018, followed by a $40-million loss in 2018-19, largely due to initial startup costs to establish the retail network. By 2019-20, the province is forecasting OCRC net income of $35 million, followed by $100 million in net income by 2020-21.

– In a bid to crack down on the black market for marijuana in Ontario, the provincial government is creating a Cannabis Intelligence Co-ordination Centre to shut down illegal storefronts.

– The province will create a specialized legal team to support drug-impaired driving prosecutions. As well, it plans to fund sobriety field test training for police officers to help detect impaired drivers.

– Ontario will be providing municipalities with $40 million over the first two years of legalization to help with the costs of dealing with recreational pot. The Ontario Cannabis Legalization Implementation Fund will be funded by Ontario’s portion of the federal excise duty on recreational cannabis, at 75 per cent.

– Ontario plans to apply the full Harmonized Sales Tax, at 13 per cent, to off-reserve purchases of recreational cannabis by a Status Indian, band or band council, similar to tobacco and alcoholic beverages. However, medical cannabis purchased off-reserve from a licensed producer will be eligible for a rebate of the eight per cent provincial portion of the HST.

B.C.’s tight rental market has landlords asking personal questions: report

Some landlords in British are asking prospective tenants for too much personal information including credit card details, three months worth of bank statements and inquiring whether applicants were born in Canada, says the Office of the Information and Privacy Commissioner.

Acting commissioner Drew McArthur said 1.5 million people live in rental housing, representing about 30 per cent of all households in B.C., but the vacancy rate is so low across much of the province that landlords are taking advantage of the power imbalance.

“Housing is big business in B.C.: In one estimate, residential tenancy generates a greater direct impact on GDP than the mining or forestry industries,” McArthur said in a report released March 22, 2018.

Nationally, the urban centres with the lowest vacancy rates are all in British Columbia, with the province’s overall vacancy rate at 1.3 per cent, he said, adding Vancouver’s rate is 0.9 per cent. The lowest rate is in Abbotsford-Mission and Kelowna at 0.2 per cent.

McArthur said his office is investigating whether a new service complies with the Personal Information Protection Act in its collection of information about tenants from sources including social media platforms, which landlords are not authorized to search.

“In addition, I understand that some of these organizations require prospective tenants to complete behavioural questionnaires to evaluate their character,” McArthur said.

The Human Rights Code also prevents landlords from asking for information about race, religion and family status, McArthur said.

“You also cannot inspect an applicant’s current residence or ask if an applicant may become pregnant in the next 12 months,” he said.

Landlords are authorized to collect a reasonable amount of information, such as references, recent pay stubs, a letter from an employer or permission to call an employer about income, as well as age for rental properties restricted to people over 55.

McArthur said his office receives calls daily from anonymous tenants worried about the over-collection of their personal information though many don’t file complaints because they fear being blacklisted.

In one case, a caller said a landlord asked for copies of their child’s report cards, he said.

“During this investigation, I heard from tenants seeking luxury accommodation as well as basic housing. I heard from young people and from retirees, in urban and rural areas.”

One caller reported a landlord insisted on seeing his T4 slips, even though he had already verified his income by providing a letter from his employer, and another person said a landlord demanded consent to a credit check after an offer to pay one year’s rent in advance.

“A landlord is only authorized to request consent for a credit check where a tenant is not able to provide satisfactory references, or employment and income verification,” the report says. “While it is reasonable to collect a prospective tenant’s credit history in these circumstances, it will not be necessary for most tenants, and a landlord cannot require every applicant to consent to a credit check.”

The report is based on a review of 13 tenancy applications, eight involving for-profit landlords and five that pertain to non-profit organizations. It found 10 of 13 landlords collect information, that, if used, would contravene the Human Rights Code as well as the Personal Information Protection Act.

Information requested included birth date, driver’s licence number, social insurance number, federal tax assessments, whether the applicant speaks English and the name of their bank and how long they’d been a customer there.

The report makes 13 recommendations, including that landlords must state clear, specific purposes for collecting personal information.

Bank of Canada holds interest rate, underlines ‘growing’ trade uncertainty

By Andy Blatchford

THE CANADIAN PRESS

OTTAWA _ A cautious Bank of Canada kept its key interest rate on hold Wednesday as it bought itself more time to monitor mounting trade-related uncertainties out of the United States.

In sticking with its 1.25 per cent overnight target, the central bank blamed recent trade policy changes for the thickening clouds around the economic outlook.

Last week, U.S. President Donald Trump threatened to impose heavy tariffs on Canadian steel and aluminum. The announcement added to an already murky context for Canada that includes concerns over NAFTA’s renegotiation and fears over competitiveness, following corporate tax cuts south of the border.

The prospect of tariffs has created deep concerns in Canada, the No. 1 supplier of both steel and aluminum to the U.S. Ottawa has hinted at retaliatory action, as have the European Union and Mexico, in what could become an all-out trade war.

Trump has said that Canada and Mexico might be spared from his plans for a 25 per cent tariff on steel imports and 10 per cent tariff on aluminum imports if they agree to better terms for the U.S. in talks aimed at revising the North American Free Trade Agreement.

The Bank of Canada noted the widening unease around protectionism, without explicitly mentioning the tariff threat.

“Trade policy developments are an important and growing source of uncertainty for the global and Canadian outlooks,” the bank said in a statement Wednesday that accompanied its latest rate decision.

Many experts now believe the central bank will likely wait until the second half of the year before raising the rate again. Some say the next hike might not come until 2019 and at least one economist said Wednesday that, depending how things evolve, the bank could even lower the rate this year.

“If the worst-case scenario of some kind of trade war goes ahead, well, the chances of a rate cut this year are real,” Sebastien Lavoie, chief economist of Laurentian Bank Securities, said in an interview.

‘It seems to us that it’s very unlikely the Bank of Canada will be able to raise rates in the first half of this year. If it happens, it will have to be in the second half of this year and that may not even happen.”

Josh Nye, an economist with RBC Economics Research, said it’s unlikely metals tariffs on their own would drastically change the central bank’s thinking about whether it stays on a rate-hiking path.

“But if tit-for-tat measures escalate into a full-blown trade war _ and to be clear, we aren’t nearly there yet _ the (Bank of Canada) would have to rethink their tightening bias,” Nye wrote in note to clients.

Experts said the Bank of Canada’s statement also raises other arguments to help support a wait-and-see approach with the interest rate.

The statement pointed to weaker-than-expected growth in the fourth quarter, largely due to higher imports, and said that while wage growth had improved, it still remained below where many expect it should be in an economy with no labour-market slack.

The bank also stressed the need for more time to assess the impacts of new housing-market policies, including recent changes to mortgage rules. It said a surge of strong numbers in late 2017 was followed by softer figures early this year, suggesting “some pulling forward of demand ahead of new mortgage guidelines and other policy measures.”

Growth in household borrowing has also slowed for three-straight months, the statement said.

The bank also noted some encouraging economic developments.

It said global growth continued to be solid and broad-based, the economy was running close to its potential and stronger business investment suggested economic capacity could grow even further without lifting the inflation rate. Looking at the U.S., the bank predicted fresh government spending and tax reductions to increase growth in 2018 and 2019.

The bank also reiterated that more interest rate hikes will likely be necessary over time, but that the governing council will remain cautious when considering future decisions. The council will continue to be guided by incoming data, such as the economy’s sensitivity to higher rates, the evolution of economic capacity and changes to wage growth and inflation, it said.

Ahead of the announcement, governor Stephen Poloz was widely expected to hold off moving the rate because of weaker economic numbers in recent weeks and the expanding trade uncertainty.

Statistics Canada released figures earlier Wednesday suggesting the country’s merchandise trade deficit narrowed in January, though economists noted it was driven by a plunge in imports.

The deficit was $1.9 billion compared with a deficit of $3.1 billion in December. Imports totalled $47.7 billion, down 4.3 per cent from a record level in December, while exports fell 2.1 per cent in January to $45.8 billion.

Poloz has introduced three rate hikes since last summer, including an increase in January. The moves came in response to an impressive economic run for Canada that began in late 2016.

The central bank’s next rate announcement is scheduled for April 18, when it will also publish its updated economic projections. The bank said the impacts on inflation and growth from commitments in last month’s federal budget would be incorporated into its April projections.

Federal analysis outlines how extra EI benefit program topped $1.92 billion

A Liberal program to give extra employment insurance benefits to workers in regions hit hard by a drop in natural resource prices will end up costing almost $2 billion _ more than double original estimates.

The government budgeted $827.4 million for the extra payments.

The latest department estimates show the measure will end up costing $1.92 billion, largely the result of changes that allowed more workers to receive extra payments and unemployment rates that stayed higher for longer than the government anticipated.

Further details will come out later this year when the government releases its annual report on the EI system.

The extended benefit program rolled out in 2016 for workers in 12 regions that had seen a sharp and sustained drop in employment as a result of a downturn in energy prices.

Most workers were given an extra five weeks of benefits, while long-tenured workers received an extra 20 weeks.

By July, weekly data revealed that payments had exceeded $1.3 billion and department officials warned Social Development Minister Jean-Yves Duclos in a preliminary assessment that costs were likely to top $1.9 billion.

The assessment obtained by The Canadian Press under the Access to Information Act says costs went up due to the addition of three regions to the program and making payments retroactive to January 2015, which gave workers who had already exhausted benefits an extra couple of weeks of payments.

This was particularly true for long-tenured workers. The department says these workers account for $1.7 billion in payments, despite being only 28 per cent of all recipients of the extra benefits.

The assessment noted about one-quarter of EI claimants usually use up benefits before going back to work, but almost half of workers exhausted their benefits under the Liberal program.

Employment and Social Development Canada said the unemployment rates in those regions also stayed higher for longer than officials expected, increasing “the number of claims and their likelihood of taking advantage of the EI extended benefits.”

The combined result of policy decisions and economic conditions was that 412,000 people qualified for extra benefits, instead of the 235,000 federal officials originally estimated would use the program.

“They failed to estimate just how hard it was going to be for people to get work,” said Frances Woolley, an economics professor at Carleton University in Ottawa.

“I’m kind of surprised that mistake was made.”

Parisa Mahboubi, a senior policy analyst from the C.D. Howe Institute, said extended high unemployment rates would have made it difficult for workers to find jobs, leaving them to stay on the program longer than anticipated.

She said the extended benefits could have also reduced incentives for workers to find new employment.

Woolley said the policy itself appears to have been helpful for workers in need, even though it went well over budget.

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